TY - JOUR

T1 - Does the CJEU Misunderstand Investment Treaty Arbitration in Commission v Micula?

AU - Gáspár-Szilágyi, Szilárd

AU - Usynin, Maxim

PY - 2022

Y1 - 2022

N2 - This article focuses on the recent judgment of the Court of Justice in European Commission v. Micula (C-638/19 P), and even within that judgment we are only interested in paragraphs 144-145. These paragraphs lead us to believe that the Court of Justice’s more recent and hostile attitude towards intra EU investment treaty arbitration (Achmea, Komstroy, and PL Holdings) might be a result of several misunderstandings by the Court on how investor-state arbitration and BITs work. The first one concerns the nature of consent to arbitrate under an investment agreement. The second, the purpose of investor-state dispute settlement (ISDS), and the third one concerns the retroactive effects of the Court’s judgment in relation to Romania’s consent to arbitrate under the Romania-Sweden BIT. From these three issues the fourth one follows, which is a lack of clarity on the relationship between EU law and the Member States’ existing obligations under the ICSID Convention. This discussion is relevant because it shows that when a court which is foreign to a system and uses the features of that system to define and develop the features of its own legal system, the chances that the foreign system will be potentially misunderstood or mischaracterised can be very high. This in turn will not only cause legal problems, such as issues with legal certainty and the finality of decisions for already concluded arbitrations, but it will also set in motion other unexpected consequences.

AB - This article focuses on the recent judgment of the Court of Justice in European Commission v. Micula (C-638/19 P), and even within that judgment we are only interested in paragraphs 144-145. These paragraphs lead us to believe that the Court of Justice’s more recent and hostile attitude towards intra EU investment treaty arbitration (Achmea, Komstroy, and PL Holdings) might be a result of several misunderstandings by the Court on how investor-state arbitration and BITs work. The first one concerns the nature of consent to arbitrate under an investment agreement. The second, the purpose of investor-state dispute settlement (ISDS), and the third one concerns the retroactive effects of the Court’s judgment in relation to Romania’s consent to arbitrate under the Romania-Sweden BIT. From these three issues the fourth one follows, which is a lack of clarity on the relationship between EU law and the Member States’ existing obligations under the ICSID Convention. This discussion is relevant because it shows that when a court which is foreign to a system and uses the features of that system to define and develop the features of its own legal system, the chances that the foreign system will be potentially misunderstood or mischaracterised can be very high. This in turn will not only cause legal problems, such as issues with legal certainty and the finality of decisions for already concluded arbitrations, but it will also set in motion other unexpected consequences.

U2 - 10.1163/24689017_0701004

DO - 10.1163/24689017_0701004

M3 - Journal article

VL - 7

SP - 53

EP - 75

JO - European Investment Law and Arbitration Review Online

JF - European Investment Law and Arbitration Review Online

SN - 2468-9017

IS - 1

ER -